Mother died 2015, I sold her house 2022 for $142,000 and split the proceeds, what are the tax requirements?

[Schaefer13]

My mom's house depreciated by over half the market value from when my mom was alive in 2015 to when I became successor trustee and was able to sell the house in 2022.

My sister (executor and trustee) and brother were living in the house under a life estate.  By the time I was able to take on as successor trustee they had trashed the house: broken water pipes, holes in walls to outside, rodent infestation, garbage in every room, etc.  I also paid all the back taxes before going in foreclosure, the water bills, and insurance.

The proceeds are being split so I need to know if I have to file taxes on behalf of the estate, and what the tax requirements are for the beneficiaries.

[NateTheGrEAt]

Hi @Schaefer13 - sorry to hear about that situation. 

The filing threshold for an estate to be required to file a tax return is $600 of gross income. In this case, it sounds like the home was sold for a significant loss, so there is no capital gain. If there weren't any other estate income then there might be zero gross income, so an estate return is not required. However, the beneficiaries probably want to be able to use that capital loss as a deduction on their own tax returns, and the only way to make that happen is to file the estate return. So this is a situation where the estate return may be a good idea to file even if it's not technically required. 

The beneficiaries would each receive a K-1 and would use this to report the information on their personal tax returns.

I hope this information is helpful!